PMI data shows UK manufacturing was on the rise in February, before the Ukraine crisis took hold
Supply chain disruption appeared to be easing before Russia’s invasion of Ukraine on 23 February, new data shows.
The latest IHS Markit/CIPS UK manufacturing Purchasing Managers’ Index (PMI) signalled growth for the sector in February, with a score of 58 exceeding the 57.3 score in January. Any score above 50 indicates growth.
Two-thirds (64%) of the survey respondents said they were optimistic that production would increase over the next 12 months – a six-month high.
The improved performance was due to healthier domestic demand, fewer raw material shortages and easing global supply chain pressures, according to The Manufacturer.
New inflationary pressures
The Bank of England (BOE) had already predicted that inflation would peak at 7.25% this year, before the crisis in Ukraine escalated, Reuters reports.
BOE policymaker Silvana Tenreyro has since said that the surge in energy prices, that is likely to be a consequence of the invasion and subsequent sanctions, will hurt British economic growth.
“Recent developments will intensify the terms of trade shock that we were already experiencing, so will push up inflation and have a negative impact on activity,” she said.
Sanctions on Russia could hit the availability of materials used in the aerospace, automotive and electronics industries, as Russia is a major producer of metals such as titanium, nickel, cobalt and lithium, reports the Guardian.
Oil prices have hit $120 a barrel, with wheat climbing to $11 a bushel – both 14-year highs, reports the FT.